FX Blog 101

Most Traders ignore these important factors’ when embarking on their trading career. They might get lucky and have a profitable trade or two to start with, but find it very hard to replicate without professional help.

When you decide to start trading, I recommend your first step should always be to plan and create a strategy. The following 5 fundamental tips go hand in hand with each other and can potentially put on you onto a path to success.

Plan – Create a trading plan, this defines how, why and when trades should be done. If done right, a trading plan can help limit mistakes and can eliminate bad decisions made in the heat of the moment.

Education – Like any industry, education makes for good practice. To trade Foreign Exchange the most important factor is to seek out an educator with Industry experience. Do your research.

Research – You should never trade impulsively, by doing thorough research, you should be able to justify your trade. Keep up to date with fundamental developments in forex markets to build a solid foundation, which can also involve watching major non-financial news as it breaks.

Discipline – Emotions can be a trader’s worst enemy, negative emotions that can affect some traders include fear, anxiety, panic and greed. To become a successful trader, it will require determination, hard work and discipline. Accept the losses while learning from them and remember to always been realistic by setting achievable goals.

Risk Management – Be realistic about your ratio of risk vs reward while properly using a correct stop loss position.

These 5 fundamental tips should be the core principle of any trader’s focus. I can show you how to create a plan and an executable strategy that’s best suited to your trading style, show you how to research and use educational tools to trade different forex markets, while instilling proper discipline tactics and considering a good risk management concept.

No matter what you do for a living, most of us receive some sort of training during a career, doctors do internships, tradies do apprenticeships, so where do you learn how to trade FX?

After doing hours of online research to find the best Foreign Exchange educator, I was continually met with scams or people giving the industry a bad name, this lead me to created FX Trading 101. I built and tailored this course around my 30 years of industry knowledge and real life experiences. I realised that if there are people out there that would want to learn more about the foreign exchange industry and how to trade forex, then you should be given the opportunity to learn forex from an accredited and trusted source.

I have been lucky enough to work for some of the major banks around the world and build global forex strategies that have now become the foundation for these institutes. This is what makes my two-day workshop unique, no other educator will be able to provide you with the knowledge

As market professionals with a combined experience of over 75 years, foreign exchange is in our blood, we live and breathe markets. We will teach you how to apply disciplines, methods and procedures to help learn to manage risks in trading.

Remember to keep learning and always do your research, be patient and know when to stop, even when it’s profit.

Volatility has hit Markets hard in the lead up to the first round of the French Elections. The stock market was sold off to the tune of 1.6% in yesterday’s trade, whilst a scramble to buy Yen against Euro was evidenced as a risk off strategy in currency markets.

One thing for certain in markets is, uncertainty creates volatility.

Monday morning in early Sydney trade will be less than pleasant for traders and participants jump at shadows as exit polls reveal who the front runner/s are.

The big fear is that far-right National Front candidate Marine Le Pen will win, since she has run on a platform to divorce France from the euro — an action that could threaten the future of the entire euro zone. As it stands now, there is a good chance Le Pen will emerge from the first round pitted against one of three candidates: far-left candidate Jean-Luc Melenchon, conservative Francois Fillon and centrist Emmanuel Macron, a former economy minister.

Buckle up for some extreme volatility over the next month. The runoff election is set for May 7.

Over the next few days, you may see the risk off trade continue, however, remember the Trump victory. All the value was in the 2nd phase trading. Buy the rumour, sell the fact.

French presidential candidate Marine Le Pen told a political rally on Sunday that the Euro currency which she wants France to ditch, was like a knife in the ribs of the French people.

The leader of the eurosceptic and anti-immigrant National Front (FN) also told the rally in the city of Bordeaux that the forthcoming election for president could herald a “change in civilization”.

Encouraged by the unexpected election of Donald Trump in the United States and by Britain’s vote to leave the European Union, Le Pen hopes to profit from a similar populist momentum in France, though opinion polls suggest she will lose the May 7 run-off.

“We are at the mercy of a currency adapted to Germany and not to our economy. The euro is mostly a knife stuck in our ribs to make us go where others want us to go,” Le Pen said to loud cheers and applause.

A government under Le Pen’s presidency would take France out of the euro zone and bring back a national currency, hold a referendum on its EU membership and slap taxes on imports and on companies hiring foreigners.

As the analogy goes…..If the United States coughs…We in Australia catch a cold. So, what happens if China gets a cough…or worse the flu? You would think we in “The Lucky Country” are toast! How many countries would be infected? A Plague perhaps?

China represents a massive 26 % of our Trade Weighted Index, whereas the United States is at 11 %.

Any decline in this number would be detrimental to our economic health. You can see the importance of China firing a shot across our bough recently suggesting siding with the U.S. would not be such a good idea.

The dilemma we have is on multiple fronts, what if, or what happens to Australia, if China’s growth comes to a standstill? Economically, China is looking vulnerable at the moment.

Here are some of the concerning headlines of late:

Chinese capital controls bite

China slams brakes on outgoing investment.

China tightens capital account again.

What would a U.S-China Trade war look like?

China property correction imminent.

Shrinkflation comes to China

China is wrestling with a building financial crisis.

At home, here in the land of milk and honey, a GDP print of -0.5 was less than acceptable. Another negative print in the March release and we are officially in a recession.

I don’t even want to think about what is on the horizon for interest rates and the Housing Market bubble.

As in Europe, we are in for an interesting 2017. So, buckle up folks we are approaching some turbulence.

Crisis ? What Crisis ? ……..Supertramp 1975 !!!

Italians will goes to the polls on Sunday, December 4, to vote on whether to back reforms of the country’s constitution.

Why is the referendum important?

Firstly, the reforms are significant, so significant, some have argued, that if they are approved by the electorate, they would represent the birth of Italy’s third republic.

Secondly, Italian PM Matteo Renzi has staked his future on the vote, saying he would quit if he is unable to secure a victory for his constitutional changes. That could have wider implications for the European Union, because it would open the door to the possibility of the Eurosceptic Five Star Movement getting into power, who have made no secret of wanting to hold a referendum on Italy leaving the Euro.

The reforms propose drastically diluting the power and size of the senate and replacing elected senators with representatives from the regions.

The other main pillar of the reforms is to rebalance the power of the regions, bringing more areas under the control of central government and removing any duplication.

So, What happens if Renzi does quit?

The paradox is a referendum that is seeking to bring stability of government to notoriously volatile Italy could in fact plunge it into a fresh crisis.

As it stands, Italy’s unemployment rate was 11.4 percent in August and has debts of 132.7 percent of GDP, the second highest level in the EU, after Greece.

Italian banks have massive bad debts, and may need a significant injection of funds. Italy is in a vulnerable position.

This referendum could lead Italy to another, that being, should Italy remain in the “Euro”?, which in turn, could have a contagion effect on the entire Eurozone.

This does not bode well for the Eur/Usd. Sub 1.0000 prices should follow. The USD is King for now.

Is it all too soon? I know right……We are still getting over Brexit and Trump’s victory.

Well Frexit could potentially break up the European Union. Brexit opened the gates for unexpected change and it looks like the people have spoken.

Marine Le Pen the leader of the Front National Party has proposed a referendum if she were to win power in the 2017 elections. Support for the bloc is declining across many of the 28-member-states with referendums and elections opening up across the continent.

Referendums have rocked the EU over the last few months with Brexit, the Dutch refusing an EU treaty with Ukraine and the coming votes in Italy and Hungary. The floodgates will open in the 28 member union, that’s 11 more currencies to trade if the Euro$ breaks up.

I might be showing my age, but this is back to pre 1999, and the volatility and uncertainty that goes hand in hand. I forsee dark clouds accumulating in the not too distant future, watch this space.

What will happen to the USD on a Trump victory.

On election day, the Forex Markets are open, as well as the Futures Markets, the NYSE and the NASDAQ. However, that’s not the problem, the elections results will become apparent during the Asian time zone.

There is a window between New York close and Tokyo opening affectionately known as the “ Twilight Zone” where volume represents only 2 percent of maximum turnover. As a result, any transactions in that period are vulnerable and can hit the market awkwardly. Let alone any major news event, such as, a lopsided or unexpected election result. So, hold onto your hats. Wednesday Asia time could be similar to a “Brexit style” and “Flash Crash” currency moving Market all rolled into one. The market hates uncertainty.

Trump Victory and the USD

A few months ago nobody gave Donald a snowflakes’ hope in hell of winning the election. Today however, is a different story. It’s neck and neck.

We have already a selloff in stocks globally in the lead up to the election. Be certain, there will be more volatility to come in both currency and stock markets. Trade agreements worldwide could be in jeopardy with a Trump win as he wants to renegotiate NAFTA and scrap the TPP – most certainly harm developing nations who export to the U.S.

Uncertainty almost always spells negativity in markets. Initial reactions to a Trump victory would see an exaggerated USD and stocks selloff globally. Markets tend to react in a “shoot first- ask questions later” fashion, especially if the results happens in the “Twilight Zone”.

That said “fortune follows the brave”. There is always opportunity in the contrarian approach to overreacting moves in markets.

Trade selection is the key component in these exaggerated events.

Either way, Hillary or Donald, brace yourself for years of uncertainty.

The markets are focused on next weeks’ NFP numbers in the U.S as the “make or break” decision for a much anticipated rate hike.

Is this really the confirmation the Fed needs to pull the trigger?

Surely not, there are bigger fish to fry.

The markets (and the Fed) are looking for excuses to do nothing until the election results are in.

Talk about 2 underwhelming Candidates. Which way will America vote.

Hillary, with all her experience in political office, can she deliver on her economic policies of Economic Growth, Fair Growth and Long Term Growth. You would think she already has Foreign Policy down pat, despite Donald’s call of the commencement of WW3 in Syria should Hillary win.

Donald, on the other hand, says he will create 25 million new jobs over 10 years. Create a pro-growth tax plan, an America first trade policy and an unleashed American energy plan. Not to mention boosting growth by 3.5% per year on average.

In the period in between NY close and Asia open proper, there was a distinct lack of buy orders placed in the GBP across the various electronic platforms. Liquidity was virtually zero. The buyers were no match for the sellers. It didn’t help matters when the market is nervous due to ongoing negativity and uncertainly over Brexit.

Enter the “Algorithmic Traders”. Electronic systematic traders, sometimes referred to as “black box” traders are programmers dressed as traders. These automatic traders chase the best bids and offers in the markets. Occasionally, when is little liquidity in the market “the Algos” chase the market down or up, in this case down causing a “Flash Crash”

The sterling traded from 1.2600 to 1.1800 in minutes.

Stop sell orders were triggered initially to 1.2200 where the first pocket of liquidity/buyers was found. Between 1.2200 and 1.1850, 4 billion GBP traded hands.

The commentators are screaming for an investigation, and regulation. Too late boys and girls. It’s history now.

My workshop will teach you when to stay out of vulnerable currencies pairs and markets and the reasons why.

Adrian Lloyd Jones (ABN: 22 152 354 514) an Authorised Representative (AR No. 001244621) of HLK Group Pty Ltd (ACN: 161 284 500) which holds an Australian Financial Services Licence (AFSL no. 435746). Any information or advice contained on this website is general in nature only and does not constitute personal or investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. You should seek independent financial advice prior to acquiring a financial product. All securities and financial products or instruments transactions involve risks. Please remember that past performance results are not necessarily indicative of future results.

The information on this site may be accessed worldwide however it is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Adrian Lloyd Jones is not registered with any US regulator including the National Futures Association ("NFA") and Commodity Futures Trading Commission ("CFTC") therefore products and services offered on this website is not intended for residents of the United States.